January 2012

I identified a Hidden Pivot at 30.120 here yesterday as a minimum upside objective, but yesterday's price action lends more weight to another pair of pivots -- they lie, respectively, at 29.755 and 30.825 -- that will probably play a larger role over the next few days. The provenance of both is shown in the chart, and it will undoubtedly take some diligent attention to the 15-minute chart to exploit the anticipated move without risking much.

Stocks and bullion are moving in lockstep these days, and so my expectation of imminently higher share prices extends to gold as well. The March contract would become significantly more attractive if and when the rally surpasses the external peak at 1645.80 highlighted in the chart.  This seems like a good bet right now, given that yesterday's high somewhat exceeded a minor 'D' target at 1624.60 flagged here earlier, putting into play a 1646.20 target.

Yet another day of sloppy price action has left my outlook unchanged.  I expect the next move to be higher, and once decisively past 1280.75 the futures will become an odds-on bet to reach a minimum 1298.50. As noted here previously, camouflageurs should look for opportunities long and short on intraday charts of 15-minute degree or less.

In the Rick’s Picks forum, Gary Leibowitz is a square peg in a round hole. A steadfast Obama supporter, his outlook for the economy is almost as annoying. He actually thinks we’ll muddle through 2012 without a global financial collapse and believes the U.S. economy is on the mend.  Here’s Gary in his own words, posting to the forum yesterday:  “As Obama is being bashed for his outrageous spending spree over these last three years, the economy is showing improvement across the board. The dollar has to do well in this scenario, which will place pressure on commodities. The corporate earnings picture is a bit more cloudy. Overseas exposure will certainly hurt the bottom line.” Crazy, right?   In the first place, where would economic growth even come from, given the shrunken state of America’s manufacturing sector and the death spiral globally of our former bailiwick, grotesquely leveraged financial “products”?  Factor in an apparently intractable deflation in the housing sector, and the best we could hope for in 2012 is to keep the Second Great Depression at bay for another year, right? And yet, is it possible he could be right – that 2012 will end, just as 2011 did, with no world-shaking financial catastrophe to end these tolerably hard times?  In fairness to Gary, we should note that he is not all lollipops and roses. “I am not proclaiming all is well, or that we will come out of this unscathed,” he continued in his post. “I just don’t see the Armageddon everyone is expecting.  If we do hold off a recession this year, then the odds of a severe recession in 2013 increase greatly. Real estate and other ‘assets’ will most likely take it on the chin. Deflation pressures will mount. Can’t see many winners except cash.” We’d have

I've featured a chart of the Dollar Index in today's touts because it looks like it's about to pop.  Since this would have negative implications for the geopolitical world, I'll be monitoring this vehicle more closely in the days ahead.

A relatively docile dollar has allowed a broad swath of investables to meander for the last three weeks, but that could change if the Dollar Index pops above a key high at 81.44 recorded about 13 months ago.  DXY has been marking time since mid-December, but the relatively shallow pullbacks during that time suggest that it is in consolidation rather than distribution.   Moreover, a subtle sign that the implied thrust could happen soon can be seen in the bullishness of the hourly chart (see inset).  Yesterday's surge stalled precisely at the 80.33 midpoint resistance of the larger pattern, but if that number is exceeded today, dollar bears had better prepare to take flight, since the 'D' target to which it corresponds is 81.13. Exactly what a flight to the supposed safety of the dollar implies for the geopolitical world is impossible to say, but it is foreseeable nonetheless that the news will not be felicitous.

Unlike gold, silver's thrusts have been unambiguously impulsive on the lesser charts, suggesting it will lead the way (as well it should, since silver has a lot more lost ground to make up from 2011). We can use the 30.120 Hidden Pivot shown in the chart as a minimum upside target for now, predicated on a decisive push above it 'p' sibling at 29.520. That resistance was exceeded yesterday by 2.5 cents, tipping my bias for Thursday bullish.  Night owls should notice that, at press time, the futures were working on a bullish 'camo' pattern projecting to 29.600.  On the 15-minute chart, A=29.120 at 8:30 p.m. EST, and B=29.440.

Minor rallies still seem to be struggling to reach unchallenging targets, but the short-term outlook is nonetheless bullish, since the futures spent most of yesterday consolidating above a minor midpoint resistance at 1614.20.  Its 'D' sibling is 1624.60, and so we'll use that number as a minimum upside objective for Thursday morning. However, if bulls break loose, use the 1646.20 target shown in the chart as a minimum objective. What I like about the pattern it's associated with is the sibling resemblance between segments k-A and B-C.

The futures spent the day digesting Tuesday's unwarranted gains, but we should expect them to continue higher because there's nothing in the news that might have emboldened sellers. Although the 1280.00 peak of the short squeeze fell a few points shy of a Hidden Pivot target at 1283.00, a closer inspection reveals that it actually exceeded another target by a similar amount, negating any mildly bearish conclusions we might otherwise have drawn. Now, if buyers can push this windbag past the 1280.75 midpoint resistance shown in the chart, we should expect it to continue higher to at least 1298.50, the pattern's 'D' target.  Camouflageurs will need to zoom down to the 15-minute chart, and to look for external peaks created January 3 on the way down, to ferret out an opportunity subtle enough for our purposes.